What is PILON?

  • Contents

    • Overview

    PILON (Payment in Lieu of Notice) could be a term you might come across when negotiating a settlement agreement with your school or being made redundant.

    We have published other support articles providing an overview of the topics of settlement agreements and redundancies.

    Often you will encounter PILON when there has been a dispute in the workplace as your employer will not want you to be on the school site if there will be a negative impact on your colleagues or the reputation of the school. 

    Essentially it will mean you will not need to work your notice period and you will receive a compensation payment instead of working your notice period.

    You should check your employment contract to see if it mentions any specific details.

    At Edapt, our team of caseworkers will be able to support you with negotiating the best possible outcomes for your circumstances.

    What is PILON?

    Practical Law explains that PILON is a contractual right to pay an employee a lump sum rather than require them to serve out their statutory or contractual notice period. 

    If there is no clause an employer who pays a PILON instead of requiring the employee to serve their notice period will be in breach of contract, and the PILON therefore represents damages for that breach.

    PILON will be subject to the usual deductions of income tax and National Insurance.

    Is PILON different from gardening leave?

    Yes. We have written another support article on the topic of gardening leave here.

    Essentially, with gardening leave you will not be performing the duties of your role, however you will not be allowed to gain employment anywhere else during the notice period either. PILON means that you can immediately start looking for another role elsewhere.

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    The information contained within this article is not a complete or final statement of the law.
    While Edapt has sought to ensure that the information is accurate and up-to-date, it is not responsible and will not be held liable for any inaccuracies and their consequences, including any loss arising from relying on this information. This article may contain information sourced from public sector bodies and licensed under the Open Government Licence. If you are an Edapt subscriber with an employment-related issue, please contact us and we will be able to refer you to one of our caseworkers.